Aurobindo doubles capex to Rs 600 crore

HYDERABAD: City-based pharma player Aurobindo Pharma has doubled its capex plan for the current fiscal by earmarking around Rs 600 crore as compared to a total capex of Rs 350 crore in FY14.
“The company’s new capex, including maintenance, is expected to be in the range of Rs 600 crore for FY15, which will be evenly spread out over active pharmaceutical ingredients (APIs) and formulations.The company’s operations have resulted in substantial improvement to support the capex through internal cash generation,” Aurobindo Pharma managing director N Govindarajan said during the first quarter earnings call.
According to the company, the major investment will be towards expanding the capacity of its API unit (unit-11) in Vizag. “Almost around 1100 cubic meter capacity is getting commissioned from February 2015 at Unit-11 in Vizag,” Govindarajan said, adding that the company has also started investing in fulfilling its European requirements at the Vizag facility and is also expanding an injectable portfolio at Unit-4 in Hyderabad.
“Apart from that we have started investing in Naidupeta for our future requirement of US oral products,” Govindarajan said. Meanwhile, he said that the company is betting big on its US operations in the coming quarters. “The operations are expected to improve further in the quarters ahead, with additional orders for an enhanced portfolio of controlled substances. Aurolife is also embarking on expanding its manufacturing facilities to meet the increase in demand,” he said. Aurolife, which is the company’s US manufacturing base, continued to see an improvement in sales and profitability during the first quarter of FY15, generating $26 million in revenues.
On its European business, the company said it expects to pare down the EBIDTA (earnings before interest, taxes, depreciation and amortization) losses of its Actavis business during the current fiscal. Aurobindo had acquired Actavis’s commercial operations in seven western European countries in January this year to expand its footprint.
“As we indicated last year, when we acquired the business (Actavis), the EBITDA loss was 23 million euros and we estimate that in the current year we should be able to bring it down to about 10 million euros,” Govindarajan said.
During the acquisition of Actavis, Aurobindo had said that though these businesses were “currently loss-making, Aurobindo expects them to return to profitability in combination with its vertically integrated platform and existing commercial infrastructure”. Aurobindo clocked revenues of Rs 624 crore from Actavis’ business in the first quarter of this fiscal.